Major oil dealers were working round the clock to put their books in order to be allowed to get petrol from the Kenya Pipeline Company (KPC).
The Kenya Revenue Authority on December 22 wrote to KPC asking it not to allow the firms access to the products until they had paid up.
"The following companies have not paid Government taxes which collectively are in excess of Sh500 million. The purpose of this letter is to ask you not to allow delivery of petroleum products from KPC facilities until instructions to allow the delivery are issued by KRA," the letter said, triggering panic among the affected companies, which have begun updating their books.
Oil companies are supposed to pay 50 per cent of the tax due upfront as opposed to a previous system which gave them a 10-day window between delivery and tax payment.
Kobil's managing director Jacob Segman said the problem between oil marketers and KRA was in respect to taxes for products drawn in September.
A Caltex spokesperson blamed the problem on discrepancies between quantities and the taxes demanded.
She said her firm had resolved the issue by reconciling with KRA the quantities of products and the amount of taxes paid to KRA.
"Caltex reconciled with KRA the amount of fuel and the taxes. Our operations are normal as the issue has been sorted," she said.
KRA senior deputy commissioner in charge of Southern Region Alphonce Ntogaiti Muronga said: "Since we issued the notice, some of the affected companies have started paying and we are happy with the response."
Some of the affected companies said they had complied with the KRA directive and that they did not anticipate a fuel crisis.
"As for our case I don't think there is a problem because we are receiving our supplies from KPC as usual after complying with all tax conditions," a manager with one of the affected companies said but requested anonymity.
It emerged yesterday that the new developments followed a notice by KRA to the oil firms early last year to account for millions of shillings in unpaid taxes.
The firms were given until March 10 last year to account for the oil they had imported between 2000 and 2004 and to show proof of having paid outstanding import declaration fees (IDF) and suspended duty on oil imports.
The Government last year introduced a new policy to handle petroleum products, aimed at enhancing revenue collection and dealing with tax evasion.